Partnering with Mechanical Contractors:

Electrical contractors seem to be divided into three groups when it comes to working with mechanical contractors; the first group has made the mechanical portion of the industry a part of its own business. These mechanical/electrical/plumbing (MEP) firms approach electrical and mechanical work in the same manner, as they are both core functions of their business. The second group works with mechanicals on a case-by-case basis, meaning that they work with them when projects, contracts and clients dictate.

The third group holds the most promise for future and additional work for those who are strictly electrical contractors. This group comprises the firms that seek out partnerships with mechanicals and maintain long-term relationships with them for the purpose of working on projects together and in a cohesive manner. The preferred term for this type of relationship is “teaming.”

A growing trend
As construction projects keep getting larger and more complex, the need for working together has become increasingly necessary. The IT side of the contracting industry incorporates complex systems that require a teaming approach. Projects are much too vast to be managed, designed, supplied, installed and maintained by one type of firm.

Systems have become dependent on one another, and this includes mechanical and electrical systems. Because of their interdependence and the need for advanced forms of integration, it is insufficient for mechanical and electrical contractors to work separately from one another.

“Mechanical and electrical contractors have always worked together on projects, but with the integration of systems, the mechanicals have become more dependant on the proper functioning of electrical systems. Electrical systems (fire, security, digital control, communications and power) can prevent the mechanical system from operating properly, and, in some situations, can disable the mechanical systems completely,” said Jim Fields, vice president, Superior Mechanical Services Inc., Greensboro, N.C.

The continued acceptance and popularity of design/build has helped bring the teaming theory to the forefront, as it is an instrumental function of the process. Basically, the design/build approach can be viewed as a primer in teaming initiatives.

“Teams tend to develop strong and lasting repetitive relationships, which enhance the team’s competitive posture,” said Walker “Lee” Evey, president, Design-Build Institute of America (DBIA). Many new DBIA initiatives center around teaming and its benefits.

The design/build approach has made an impact across various trades, and many have begun to take notice.

“I absolutely see partnering happening, and it is much more prevalent in design/build and fast-track projects. We have had mechanical, electrical, [our company] and the GC all married together. Now that marriage can be made by the owner or by the team in advance and presented to the owner. Obviously, we like a marriage of our own choosing much better, and the shotgun marriages can be disastrous because relationships between the entities are not in place,” said David J. Meyer, P.E., LEED AP, Pathfinder Engineers LLP, Rochester, N.Y.

Making a team
When steering your firm toward a teaming environment, you must ensure that potential team members are mentally prepared for it throughout the whole organization. This approach will change the firm’s structure, temporarily or permanently, and your employees and/or coworkers may not approve. It could create dissent and damage if not everyone is on board.

It is also important to recognize and admit that partnering is not suitable for every contractor. Simply put, regardless of trade represented, there are naturally going to be contractors who just do not enjoy or succeed in a team environment. When that is the case, it is best not to push or be pushed into partnering. It is also important to remember that teaming is not always a viable option for every project. Not being completely on board with this particular process is a sure fire way to set oneself up for project failure.

But, let’s just say you’ve put aside those objections. What now? One way to embrace the teaming approach is to let go of the traditional contractor approach to projects better known as plan/spec/bid/build (or simply bid/build). Low cost also needs to take a back seat since the teaming approach foundation is rooted in experience, past performance and best value, not lowest cost. Also, one must expect compromise will be involved in such a relationship, but, regardless, there are benefits.

“Most of my experiences have been very positive. When we find a quality electrical firm we like to work with, we use them over and over. We have had many successful projects working together with electrical contractors,” Fields said.

Drawbacks do exist, however. “One time, an electrical contractor working for me sized the main incoming wires too small. He had to remove the wire and replace it with larger wire. I hated this because I knew it had a negative impact on his ability to profit from doing this work for me. I want the contractors I work with to be glad they did when the job is finished. Because in the long run, my success is tied to their success,” Fields said.

Contracting strategies Contractors new to teaming arrangements may be concerned about the legal ramifications of joining forces with other entities. Some kinds of teaming arrangements, such as joint ventures, can be formal and complex.

When considering a joint venture, “You need to think long and hard about whether or not you want to be legally bound to the other partners,” Meyers said, adding that typically joint ventures are legally binding partnership arrangements undertaken for a specific purpose. Joint ventures can give rise to bonding and liability issues that do not exist in a more traditional contracting framework. For example, when a construction manager (CM) enters into a contract with an owner and everyone else works as subs under the CM, the bonding and liability issues are more straight-forward.

The same holds true when an owner enters into separate contracts with various specialty contractors. In each case, the bonding and liability (e.g., insurance) issues are easier to address since the sureties and insurance companies work with their individual clients and do not have to address the complexities of a joint venture involving other members with potentially shared liability.

The foregoing concerns often make contractors think twice about forming a joint venture. However, a joint venture has its place, generally for those contractors teaming with others for the long haul and/or for the purpose of going after large projects they could not obtain on their own. A joint venture can also work well for firms that are aggressively marketing a contractor team of complimentary skills to multiple clients and potential customers.

Of course, as noted above, other contracting options exist, such as the traditional owner-contractor-subcontractors approach, a multiple prime contractor arrangement where the owner enters into a series of separate contracts, or where the owner hires a CM to work under an agreed arrangement (e.g., cost-reimbursable plus fee) and the CM enters into various subcontracts with owner-approved subcontractors. Under this second option, the CM essentially functions as the owner’s prime contractor. The mechanical, electrical and other trades would work under subcontracts with the CM, who holds the master contract with the owner.

This is not much different from the traditional owner-contractor-subcontractors approach, except that with a CM, the owner has more control over the decision-making process (e.g., subcontractor teams are preapproved and chosen to work together, not forced to work together based purely on the bidding system) and the CM usually has less cost risk and some kind of fee arrangement tied to the CM’s performance.

Getting started, moving forward
Consider this: there are probably plenty of mechanical contractors out there with whom you have worked, and there is bound to be at least one with whom you have worked exceptionally well. You should seek those firms out first with the proposal of starting a partnership.

“One of the largest growth areas for our company has been in the equipment-replacement business. When our clients want an air-handling unit, chiller, tower or pumps replaced, they only want to deal with one contractor. Working together with an electrical contractor allows us to advise the customer on just how much power is available for the new equipment and what might be the most economical method of installation. Everyone benefits from this, especially the client,” Fields said. Though this is a specialized example, the same scenario continues to play out throughout numerous other contracts spanning just about every imaginable market.

“Mechanical and electrical contractors are on the same job sites all of the time. Be selective of the mechanicals you try to partner with. Evaluate their work on other jobs. You don’t have to be a mechanical expert to see which ones would be the best to choose. How do they treat the subcontractors that are working for them now? Keep in mind that all contractors, no matter what trade, want some of the same things, happy clients, satisfied workers, a good working environment and perhaps, if all goes as planned, a little money left over for themselves at the end of the job,” Fields said.

“The best way to get started in teaming is to start small. If there is a firm that you already have established a working relationship with, start there. Work that relationship,” Meyers said.     EC